Bank of Nova Scotia will start disclosing how much of its lending is directed at low-carbon energy versus high-emitting sources, prompting a group of Canadian and international investors to withdraw a shareholder resolution they had planned to try to force the issue.
In its management proxy circular published on Friday, Scotiabank said it would report the metric, known as the energy supply ratio, before June 1, 2026. The move is in response to a proposal submitted by PFA Pension, Denmark’s largest retirement fund, and the Shareholder Association for Research and Education, or SHARE.
The investor group had targeted four of the country’s biggest banks with the resolution for their coming annual meetings. Of those, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank and Bank of Montreal have urged their shareholders to reject it. The country’s largest lender, Royal Bank of Canada, had already agreed to start reporting its energy supply ratio.
SHARE, a shareholder advocacy group, says the ratio is one way for investors to gauge the institutions’ climate-related risks by tracking their exposure to fossil fuels. It said it has been in discussions with Scotiabank about the issue for more than a year.
In its proxy circular, the bank said it agreed to disclose the methods it uses to calculate the ratio, along with the annual results. It also said it will work toward industry-wide standards for the measure.
The other banks said the lack of consistent standards reduces the value of the metric, and that is one reason their shareholders should vote against the proposal. Bank of Montreal said it could open it up to legal and reputational risks.